Charles River Laboratories International Inc ($CRL) Q4 2025 Earnings Call

Thank you and good morning. As Todd mentioned, I'm pleased to be joined today by Birgit Gershik, who will become our next CEO when I retire in May, as well as our interim CFO, Mike Nell. Birgit will provide an overview of our 2026 guidance and the key drivers behind our outlook. But before I hand the call over to her, I will provide details on our fourth quarter and full year 2025 financial results, as well as an update on our latest developments and market trends. We were pleased that our 2025 financial results were at the upper ends of the revenue and non-GAAP earnings per share ranges that we provided in November. Beyond our financial results, the fourth quarter capped a year that was marked by the stabilization of the biopharma demand environment, including substantial improvements in DSA net bookings, particularly during the first and fourth quarters. We also advanced several strategic initiatives that will enable the company to better capitalize on future growth opportunities and renewed our focus on scientific innovation that will reinforce our position as the leader in pre-clinical drug development.

At different points during 2025, demand from both global biopharmaceutical clients and small and midsize biotechnology clients showed signs of improvement. Many of our global biopharma clients progressed through their restructuring and pipeline reprioritization activities and after holding back spending in 2024, moved their programs forward with more urgency when new budgets were released in early 2025, which led to strong DSA bookings at the start of last year. The biotech funding environment slowed in the first half of 2025 and we subsequently experienced softer demand trends from our small and midsize biotech clients during the summer months. However, with a reinvigorated funding environment in the second half of the year, including a record level of $28 billion in the fourth quarter, biotech clients were the primary driver behind a steady sequential increase in the DSA net book-to-bill in each month during the second half of the year. As we disclosed at an investor conference last month, the DSA net book-to-bill improved to 1.1 times in the fourth quarter. Taking these factors into account, we are cautiously optimistic that the favorable DSA demand trends will continue in 2026 and result in a return to organic revenue growth in the second half of the year for both the DSA segment and the overall company.

We have also made substantial progress on the strategic actions that we outlined in November to unlock long-term shareholder value, including strengthening and refining our portfolio, driving greater efficiency, and maintaining a balanced yet disciplined approach to capital deployment. To strengthen our portfolio, in January, we announced the planned acquisitions of the assets of KF Cambodia and Pathoquest. Both of these acquisitions are squarely aligned with our core competencies and are the result of lengthy successful partnerships. KF, the acquisition of which has already closed, has been our longtime NHP supplier in Cambodia and will further strengthen and secure our DSA supply chain. We expect it will generate meaningful operating margin improvement starting later this year through significant cost savings on NHP sourcing between KF and Novabiosciences. We expect to own and internally source most of our future annual NHP supply requirements for the DSA segment. We continue to advance our NAMs capabilities with the planned acquisition of Pathoquest, which is expected to close within the next month. The company has been a partner of our biologics testing business since 2016 and provides an in vitro approach to manufacturing quality control testing for biologics. The KF and Pathoquest acquisitions are excellent examples of capital deployment in core areas that will enhance our financial profile and advance our scientific capabilities. As we endeavor to capture greater share of wallet from our clients, we will continue to evaluate additional M&A including in the areas of bioanalysis and geographic expansion in order to support our clients as they seek to drive greater efficiency and success in their drug development programs.

We are also focused on continuing to build our NAMs portfolio or new approach methodologies in areas that are most relevant to clients and their scientific needs. We believe we have already established a solid foundation of NAMs capabilities, including our Retrogenix cell microarray platform for off-target screening and toxicity, our development of virtual control groups for safety assessment studies that utilize machine learning and other techniques, and most recently Pathoquest's innovative next-gen sequencing platform. We are excited about current and future applications for NAMs and related innovations including AI and we view these as enabling technologies to support the work that we do and is complementary to it. NAMs including AI has promise but it still has challenges with data availability and proof of concept. So it will be a gradual longer-term evolution led by science and the validation of new capabilities over time, particularly in a regulated safety assessment environment where patient safety is paramount. Since we began to discuss NAMs in more detail last spring, there have not been any significant technological changes in drug development and we have not experienced any notable changes in client behavior other than more frequent conversations about NAMs.

We also continue to make progress on our plan to divest non-core assets totaling approximately 7% of 2025 annual revenue. These processes and negotiations with potential buyers are ongoing and we continue to expect the planned divestitures will be completed by the middle of 2026. Assuming all transactions are completed, the expected non-GAAP earnings per share accretion of 30 cents on an annualized basis from the planned divestitures will be less for the partial year 2026 or closer to 10 cents per share because of expected improvements in the operating performance of these businesses throughout the year. Now, I will recap our fourth quarter and full year consolidated performance. We reported revenue of $994.2 million in the fourth quarter of 2025, a 2.6% decline on an organic basis from the previous year with revenue declines in all three business segments. For the full year, we reported revenue of $4.02 billion with an organic revenue decrease of 1.6% driven primarily by lower revenue in the DSA and manufacturing segments. By client segments, sales to both the global biopharma and small and midsize biotech client segments declined modestly for the full year. In the fourth quarter, sales to global biopharma clients rebounded meaningfully versus the prior year as these clients got back to work after pulling back on spending at the end of 2024.

Sales to small and midsize biotech clients decreased modestly in the fourth quarter, largely reflecting softer DSA bookings during the summer months. As a reminder, there's a natural lag between when DSA studies are booked and when they start and begin to generate revenue. Therefore, it will take one to two quarters to see the benefit of the stronger fourth quarter bookings. The operating margin decreased 180 basis points year-over-year to 18.1% in the fourth quarter, principally driven by three anticipated factors: lower revenue, higher staffing and NHP sourcing costs in the DSA segment, and the timing of NHP shipments in the RMS segment. For the full year, the operating margin declined by just 10 basis points to 19.8% as the cost savings from restructuring and efficiency initiatives helped to protect the operating margin, which has been our stated goal. Earnings per share were $2.39 in the fourth quarter, a decrease of 10.2% from $2.66 in the fourth quarter 2024. In addition to the lower operating margin, the tax rate was also a meaningful year-over-year headwind in the fourth quarter. For 2025, earnings per share were nearly flat at $10.28 compared to $10.32 in 2024 as lower revenue was largely offset by the benefit of the cost-saving initiative. Below the line items largely netted out with a higher tax rate in 2025, primarily offset by lower interest expense and a lower share count from stock repurchases earlier in the year.

I will now provide additional details on the segment performance. DSA revenue in the fourth quarter was $591.6 million, a decrease of 3.3% on an organic basis. The decline reflected lower study volume, particularly for discovery services, while DSA pricing and mix were relatively stable. For the year, DSA revenue decreased 2.6% on an organic basis. As a result of client demand, we experienced a meaningful increase in revenue from NHP studies, resulting in an increase in the number of NHPs used in these studies in 2025, for which additional information can be found in the appendix of our slide presentation. These trends reflect our clients' continued reliance on traditional in vivo methods to help ensure drug safety. Even as we and our broader industry continue to evaluate applicable uses for NAMs and further expand our capabilities, we experienced a higher number of NHP study starts in the fourth quarter and this trend is expected to continue into the first quarter. As we mentioned in November, the higher than expected NHP study demand led to increased NHP sourcing costs in the fourth quarter and will again in the first quarter. However, due in part to the acquisition of KF, we expect NHP sourcing costs will normalize over the course of the year.

As we previously disclosed, DSA demand KPIs improved in the fourth quarter, led by net booked-to-bill of 1.12 times on net bookings of $665 million, representing a meaningful increase from 0.82 times in the third quarter. The sequential improvement was principally driven by small and mid-sized biotech clients. While global biopharma clients also contributed with both sequential and year-over-year bookings increases. Proposal value continued to be stable to improved in the fourth quarter as it was for most of the year and cancellations remained at lower levels consistent with the third quarter. At year end, the DSA backlog modestly improved to $1.86 billion from $1.80 billion at the end of the third quarter. Collectively, these trends lead us to believe that the favorable DSA demand environment will continue in 2026. However, it is important to note that this improvement may not be linear as demonstrated in 2025 and also that fourth quarter and more recent bookings activity will not more fully benefit DSA revenue growth until the second quarter due to the normal lag between booking and study start.

The DSA operating margin was 20.1% in the fourth quarter, a 460 basis point decrease from the fourth quarter of 2024. And it was 24.2% for the full year, representing a 150 basis point decline year-over-year. Both the fourth quarter and full year declines were driven by lower revenue and higher costs related to increased NHP sourcing costs and study starts in the fourth quarter as well as higher staffing costs as we had previously anticipated.

RMS revenue in the fourth quarter was $263 million, a decrease of 0.9% on an organic basis. For the year, RMS revenue increased 1.2% on an organic basis. The fourth quarter decline was primarily driven by two factors: lower NHP revenue and lower sales volume from small models in North America. NHP revenue was impacted by the timing of certain shipments, which as previously noted had been accelerated to earlier in the year. In the small research models business, lower sales volume in North America reflected that in-house research activity by our large pharma and midsize biotech clients has not fully recovered. Revenue from academic and government accounts remained very stable, but the growth rate has slowed compared to prior year due in part to the government uncertainty including with NIH budgets. Small model pricing in North America and Europe continue to be a positive contributor to RMS revenue and in Europe is offsetting the expected volume declines. In China, small model unit volume continue to grow nicely. Revenue from research model services increased in the fourth quarter, but occupancy for our Cradle sites remain pressured by the early stage biotech market environment. The RMS operating margin decreased by 90 basis points year-over-year to 21.9% in the fourth quarter, but increased by 110 basis points to 24.8% for the full year. The fourth quarter margin was primarily impacted by lower revenue for small models in North America and an unfavorable revenue mix due to the timing of NHP shipments. For the year, the operating margin improvement was primarily due to a favorable mix related to higher NHP revenue as well as cost savings related to our restructuring initiatives.

Manufacturing solutions revenue was $196.4 million for the fourth quarter, a decrease of 2.1% on an organic basis, and full year revenue declined 1.6% organically. The lower fourth quarter and full year growth rates were primarily driven by lower CDMO revenue, principally the result of the loss of one commercial cell therapy client whose revenue declined by nearly $25 million in 2025. The microbial solutions had a strong year with growth across all three testing platforms, Endosafe, Celsis, and Accugenix. However, year-end client ordering patterns were not quite as robust as last year, which caused the fourth quarter growth rate to slow. We were pleased to see the performance of the biologics testing business modestly improve and return to growth in the fourth quarter after a year that was impacted by lower sample volumes from several large clients due to project delays or regulatory challenges. The manufacturing segment's operating margin increased by 340 basis points to 32.1% in the fourth quarter and by 140 basis points to 28.8% for the full year. We were pleased that the segment's operating margin continued to improve and move closer to the 30% level in 2025, driven principally by a solid performance from the microbial solutions business, as well as restructuring actions to generate incremental cost savings, including in the CDMO business.

Before I hand the call over to Birgit to discuss our 2026 guidance, I'd like to take a moment to reflect on my long and fulfilling career at Charles River. As many of you know, in January I announced my planned retirement, effective at the conclusion of our annual meeting of shareholders on May 5th, but I am pleased to remain on our board. Leading the extraordinary team at Charles River as CEO for more than 30 years has been a profound experience and one of the greatest privileges of my life. Together, we built an industry leader with a culture shaped by our remarkable people, a strong and supportive workplace, and world-class science. All of which has enabled us to deliver meaningful outcomes for our clients and patients who rely on us. While I'm proud of our accomplishments from taking the company public on the New York Stock Exchange to transforming Charles River into a global leader in preclinical drug development services and then becoming a respected member of the S&P 500, I am most proud and appreciative of the relationships that I have built over the last five decades with my colleagues, our clients, and all of you, our shareholders and analysts. I sincerely thank you. We have made tremendous progress over the last 12 months, ranging from NAMs and NHP supply to the biopharma demand environment and our strategic review, making this the right time to transition the company into its next chapter. I'm delighted that Birgit Gershik will become our next CEO and it will be in her capable hands to drive forward Charles River's strategic direction, future growth, and operational excellence for many years to come. Birgit has played an instrumental role as COO for nearly five years, leading our global businesses, guiding our digital evolution, and most recently driving our strategic vision. I have worked closely with Birgit for many years and have the utmost confidence in her leadership abilities, and I will continue to work closely with her in the coming months to ensure a seamless transition.

As I sign off on my final earnings call, I'd like to thank our employees profoundly for their exceptional work and commitment. It is their dedication to exquisite science and exceptional client service that has distinguished us as the preeminent provider of pre-clinical services. And always I thank our clients and shareholders for their support over the years. Now I will introduce our next CEO, Birgit Gershik, who will provide details on our 2026 financial guidance.

River and throughout his career, and we look forward to continuing to execute on our strategy under Birgit's leadership. Thank you.

You guys want to take that?

Thanks, Eric.

We, from a capacity point of view we have sort of two issues. We have physical capacity which is in pretty good shape right now. So we're not optimally using our facilities which obviously that's a goal of ours but still as the hopefully the demand increases we'll be able to utilize space that's already built and be able to fill that. We've been really careful for years actually, but really careful last two or three years to get our headcount in sync with demand and with our revenue. Obviously this is a people business and it's more than half of our costs. And last year and you know 2025 we had some incremental people in our lab science building business and to fill vacant spots. So I think we're in good shape. Senior scientific staff and study directors and people like that are in particularly good shape and principally we're looking at direct labor. We need to bring direct labor on probably a quarter before we actually need them because there's some training associated with that but we're quite confident we'll be able to do that in a measured fashion to both accommodate the work and not be a drag on our operating margins.

Yes, thanks for that. So we were frankly surprised at the sort of violent share price reaction to the AI conversation that's been going on across multiple industries actually for the last couple of weeks. So it is what it is. We got caught up in that and so you know there's several things that we'd like to say about that. AI is a NAM and we're focused on NAMs to the extent that the science is beneficial, the science is additive and we view AI as an enabling technology to support our work over a long term and to complement it but we don't see it as a disruptor. AI in sort of discovery has been around for a while by many of our large clients. So that's not new. The conversations really haven't changed at all. And so for us AI and NAMs is sort of a broader longer term evolution rather than something that's immediate. We continue to see ourselves as an essential and logical partner to help validate NAMs including AI as they if and when they become beneficial and additive as I said and so we hope to be able to run interference in a positive way for both our clients and the regulatory agencies to validate these technologies, you know, if they're beneficial. So, the NAMs are basically crude right now. AI is really early that, you know, there's a promise of AI that we think could be beneficial to discovery and we don't quite see it in safety. You know, we've had some investments in AI to virtual control groups, which we talked about in our prepared remarks, some of our scientific report writing, our sales effectiveness, we have data scientists that are working on this. So, you know, we're embracing... I guess the bottom line for us is we're embracing alternative technologies strategically but the science will prevail. So the extent to which these technologies are beneficial, great. We'll use them. We think we'll use them more. We the whole industry in discovery to help our clients get to a lead compound faster. Hopefully that will have more molecules moving through pre-clinical talks and more molecules moving into the clinic and hopefully more molecules being approved. So we acknowledge it, we embrace it. We're participating in it, we actually don't see this as a threat to the company. And if these technologies are better in any way besides just being augmentative, they'll be embraced by the whole industry, but definitely nothing's imminent.

So, cancellations and slippage as we call it are sort of elements of our business. So slippage is when studies don't start when we anticipated they would start or when the clients initially anticipate and things just cancel because I don't know priorities change, therapeutic area focuses changes or the drug just isn't performing well before we even get a hold of it. Clients just can't get it to a dosage that won't be harmful to the patients. So, we have cancellations all the time and always will. You know, we have penalties for cancellations with insufficient notice, which tends to cover whatever costs we've been impacted by up to that point. And with a decent backlog we manage this really well. There's very little variability with either slippage or cancellation. So we've never given the actual percentage or dollar amount or whatever, nor will we, but we're definitely back to sort of normal expected anticipated cancellations. And we can manage that really well again without the volatility in our business model and to be able to accommodate clients across the board, you know, both large pharma and biotech. And just to go back to the sort of nine months backlog we had. Now, we like that it gives us a really great line of sight. If a study cancels or slips, we can almost always, not always, but almost always be able to slot something in the queue into real time revenue generating work to replace whatever has slipped and cancelled. So as you know because you asked the question cancellations had gotten a couple of years ago much higher than we would have liked or we had seen historically, improved last year and is now sort of back to normal levels. Impossible to predict, but we wouldn't anticipate given the sort of market dynamics, cash coming into biotech, pharma companies finishing sort of skimming down their portfolios that they would increase again in any significant way.

It's been a pleasure. It's been a pleasure, Dave.

So I'll start maybe Birgit would want to elaborate. You know, demand is improving from a whole host of factors. So significant inflows of cash into the biotech coffer, pharma companies sort of finishing some of their bloodletting and shrinking down their infrastructures and just tariff stuff being sort of over and whatever pricing situation's going on between Washington and the pharma companies. We think that that's sort of passed them. So, demand seems to be improving. We, as I said a moment ago, we liked the backlog situation. You'll recall, Dave, two or three years ago, the backlog got to about 18 months. And we loved it till we hated it. It was just way too long. And clients got to the point of canceling studies because they just booked slots without a study. So, last couple of years, we've seen a lot of post IND work. We'll always have both pre and post. We're seeing more general INDs now which is earlier than the post stuff. So that's good. We're moving towards a greater balance. So that would indicate clients are anxious to start their studies and we want to do that earlier which obviously is a good thing for us. And while we do get some late stage work, sometimes we don't do the early stage work that's typically... we like both and get both. So if we get the early work and the drug is progressing nicely, we'll typically get the post IND work as well. So sort of a balanced demand quotient right now. Maybe Birgit wants to add to that.

Mike, why don't you take that?

So our China business continues to perform well. You know it's all RMS as you know and it's an important market for us and you know we feel that we've elevated the craft of producing really high quality pristine animals and sort of taught the industry the benefit of utilizing those in terms of the quality of the work that they do and China's becoming a more sophisticated innovative locale for sure a lot of investment by the government and you didn't specifically ask this but I'm just going to throw this in there that we're looking closely at China with regard to what additionally we can do there besides RMS given that it's a big obviously a big patient population, drugs developed in China have to be tested in China and so you know we're not except for the research model part which we're thrilled with, we're not accessing any of the service revenue associated with that. So, China may become a bigger part of our portfolio going forward. Biologics was, you know, it's been a really good business for us for a long time and had sort of a complicated '25, you know, due to some lower sample volumes from a couple of large clients due principally to project delays and regulatory challenges. But that business returned to growth in the fourth quarter of '25 due to higher demand principally from Europe and we would expect some of those client specific challenges those are behind us as we move into '26. So an important business obviously only testing large molecules at least half the drugs that are approved are large molecules going forward. So a business that we think we have a strong position in, it has had years of very nice growth and escalating operating margins. So it's beginning to sort of come back. It was a business that was very much benefited by COVID. Then things sort of slowed down and now we're beginning to see them ramp up again.

I mean the big impact from us was overall soft demand from our client base both large and small companies both new and old companies who were really working on... the biotech companies were really concerned about access to capital and whether they had enough funding to work on a whole range of drugs. So it's quite clear to us that they paused some drugs before they got filed their IND. So we think they're going to get back to that and big pharma is facing another patent cliff which you know we saw this I don't know 12, 13, 14 years ago they begin to pull back on their cost structure. By the way, one of the things we do is help them alleviate or reduce some of their internal costs because we can... the work that we do on safety assessment is as fast if not faster, lower price point. And probably in most cases better science. So we're trying... we're being cautious. You know, we said that we're trying not to overcall it because it's not linear and one quarter doesn't necessarily portend the next. But what is beginning to change is the massive amount of funding that went into the biotech companies, 28 billion in the fourth quarter was quite significant. And so if that continues, January was a good month as well, but if that continues that should generate incremental demand going forward. There's usually a lag time between cash coming in and then booking studies. So we're going to see that in the second quarter but more pronounced in the back half of the year. The fact that book to bill was above one times and much higher than that in December is obviously a very important point and that's also going to benefit the second quarter and the second half of the year. So, we're trying not to overcall it, but what we have been looking for and what we've been hearing from our clients just in terms of funding and access to continued funding is beginning to happen. And since the preponderance of our revenue, we have really big market shares in big pharma, but the preponderance of our revenue and the growth rate for the last decade has been principally from hundreds and hundreds and hundreds of biotech companies, none of whom have the internal capacity to do anything that we do for them. So they must outsource. They don't have to outsource to Charles River, but most of them do. So they must outsource. And so just given the number and diversity of new modalities to treat or cure diseases these folks have to get that to work and that should generate additional volume for us and you know we're obviously comfortable with the guidance we've just given today and again we're being I think cautiously optimistic is really a good way to put it.

Yes. So our NHP sourcing volume is in really good shape now given Nova Prim and the deal that we just did with KF. So it's highly unlikely that we'll need to source anything further or buy anything further. We had already had plans to increase the Mauritian operation and if the demand continues we can increase both of them. So we feel that just in terms of quality of the NHPs, price point, just the quality of the farms that they're bred on we're really really comfortable in that. Capital deployment for us is pretty straightforward. We like to keep our leverage below three turns and we've been able to buy many many businesses over the years and you know we lever up to high twos occasionally over three and we usually delever within 12 months. So we feel really good about that. Our balance sheet is in really strong shape. Pre these deals and even after these deals leverage is just in the high twos. We'll continue to work it down. So yeah, we have a committee of the board that I sit on and we objectively look at uses of capital every single quarter, you know, in tandem with our board meetings and paying down debt, share buybacks, M&A is always on the table. So we're certainly continue to look at M&A in some of the areas that we've talked about. Bioanalysis is probably top of our list and as I said we're beginning to look closely at China. Way too early to predict that. Buying back stock is totally dependent on what else do we have a better use, what does the share price look like and we continue to pay down our debt so you know I think we have a lot of flexibility right now. We just had a board meeting last week where we talked about all these things, have another one in May and we'll continue to stay on it, but there's definitely some areas that we'd like to continue to fill in the portfolio from M&A and every once in a while we may come across one of our businesses where we don't think it has long-term value for us and so we would take a look at divesting those as well.

Sure.

So we're seeing NAMs across a big swath of our client base. We would say that big pharma has been looking at utilizing in vitro or non-animal technologies sort of forever. Lots of that's proprietary to each company and some of it's just sort of standard stuff. It's definitely more pronounced in discovery as we've been saying now as we've been talking about this more for the last year. And everybody hopes that some of these technologies, albeit somewhat anecdotal, help the process of accelerating our clients getting to a lead compound and spending less time on drugs that have a low probability of getting into the clinic and more time on drugs that have a higher probability. Of course, we get paid either way whether the drug advances to the clinic or not. So, we're there to help them and if the technology helps us make a determination with and for the client, we're certainly happy to do that. You know, as we've said before, our PathStem that we just talked about on this call is a non-animal technology, next generation sequencing that literally is replacing some of the animal-based work that we do in our biologics business. And that's a really good news that we're happy to provide that service and our clients are demanding it and it gives better answers faster. We also have another business we talked about in the call, Retrogenix. We're looking at off-target effects of drugs which is really really important. So there are some NAMs now that are beneficial and utilizable. There are some that are sort of hopeful but still early days and we believe we're only going to see it in safety in a sort of narrow monoclonal antibody swath that the FDA has talked about and too much of a safety risk to be focusing on these as replacements but likely to be augmentative to some of the wet lab work particularly in the early phases. So, we'll continue to license in technologies and periodically buy something that we think is really beneficial for our clients and we generate decent revenue and margin. We'll work with our clients in validation. But this is a long-term marathon and not something that's going to be done quickly or overnight.

Yeah, more targets would be... if you can screen through more targets at the same pace or faster that's obviously really beneficial for our clients and should be beneficial for us as well. As I said if they can go just using your numbers, if they can screen through 20,000 potential drugs that hit the target and then they can focus on the ones that have the highest probability of actually working and being tolerated by patients and get into the clinic. That should generate incremental work for us and it should also have a higher hit rate for the drug companies. It's sort of shocking. I would say that all of the US pharmaceutical and biotech companies in the aggregate only have between 40 and 50 new drugs a year right so if that could be 100 or 200 or 500 that obviously would be better for society that obviously would be better for human health it definitely would be better for Charles River it would be better for our clients so the extent to which AI can get its arms, you know, speaking to it as if it's a person, get its arms around more data earlier and have a bigger funnel. I think that would be beneficial for all of us.

I mean, the process is ongoing. You know, we have sophisticated investment banks working on these divestitures. We have interested parties. The comment that we made at a last quarter call still seems reasonable that we hope to close these divestitures sometime in the first half of this year and perhaps and hopefully we can sign something sooner, but it's difficult to tell. I mean these deals aren't signed till they're signed and they're not closed till they're done. So we're very committed to finalizing the process. We think we have some interested folks and should be a good result in terms of what we do with the proceeds. Again, it's sort of what we do with any of our cash as we look at M&A, debt repayment, share purchases all the above or just one of the above. And it's always contextual. It depends on what's going on with the market demand, what the rest of our M&A portfolio looks like, what the share price looks like. And we do that, I think, very well, very objectively, very thoughtfully every quarter. We don't have any sort of pre-ordained feelings about that. So, when we bring these deals to closure, we'll see what the world looks like at that time in terms of what we do with the assets.

You want to take that, Mike?